Could Target Stock Gain Momentum from Its Fiscal 2Q17 Results?
Target’s fiscal 2Q17 could improve
Target (TGT) stock is showing signs of recovery since the company’s management updated its fiscal 2Q171 sales guidance. On July 13, 2017, the company’s management stated that Target’s fiscal 2Q17 comps, or comparable store sales, could show modest improvement on a YoY (year-over-year) basis.
The company witnessed improved store traffic in the first two months of fiscal 2Q17. Meanwhile, its bottom-line results are projected to gain from tax benefits.
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Target stock took a beating following its dismal performance in sales and profitability in the last several quarters. Increased competition from Amazon (AMZN) and a changing retail environment further dented the company’s financials.
However, the company is taking several strategic measures that could accelerate its sales growth in the coming quarters. Target’s focus on small-format stores and the remodeling of large store are resulting in improved comps.
Increased price investments are also expected to drive store traffic. The company is fortifying its e-commerce business, which should further supplement its sales growth.
However, a tough retail environment and increased competition are likely to remain a drag on its growth. Increased investments could pressure the company’s margins.
YTD stock movement
On August 9, 2017, Target (TGT) stock witnessed a 19.9% decline on a YTD (year-to-date) basis and significantly unperformed its peers and the benchmark index. Walmart (WMT) and Costco (COST) stock rose 18.1% and 1.9%, respectively, during the same period. The S&P 500 (SPX) has gained 10.5% since the beginning of the year.
Target (TGT) is set to announce its fiscal 2Q17 sales and earnings results on August 16, 2017. We’ll look at the analysts’ expectations for Target’s sales and EPS (earnings per share) for the upcoming quarter. We’ll also focus on the current analysts’ ratings on TGT stock.
- fiscal 2Q17 ended July 29, 2017 ↩